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Adjusted Gross Income (AGI)

Adjusted Gross Income (AGI) is a term used in U.S. tax law to describe an individual’s total gross income, minus certain allowable deductions such as contributions to a retirement account or student loan interest payments. In the context of a 1031 exchange, AGI is relevant because it can impact the investor’s ability to take advantage of tax benefits associated with the exchange.

For example, to qualify for a 1031 exchange, an investor must meet certain criteria related to the value of the properties being exchanged and the timing of the transaction. Additionally, if the investor’s AGI is above a certain threshold, they may not be eligible for certain tax benefits associated with the exchange, such as the ability to defer capital gains taxes.

Therefore, investors engaging in 1031 exchanges may need to carefully consider their AGI and any potential impact it may have on their tax liability. It is always advisable to consult with a qualified tax professional to determine the best strategy for maximizing the tax benefits of a 1031 exchange.